Solv Protocol: Exploring the staking abstraction layer and liquidity mechanism in the BTCFi ecosystem

Introduction

Solv Protocol is a project established in 2020, aimed at lowering the barriers to creating and using on-chain financial tools, bringing diverse asset classes and yield opportunities to the crypto space. Solv Protocol focuses on minting and trading NFTs related to financial ownership certificates. In 2024, with the continuous development of the BTCFi sector, Solv Protocol has shifted its focus to BTCFi, creating the full-chain yield Bitcoin asset SolvBTC, aimed at providing new opportunities and possibilities for Bitcoin holders while creating an efficient BTCFi ecosystem. Recently, Solv Protocol launched the staking abstraction layer (SAL), designed to simplify and standardize the cross-chain Bitcoin staking process, thereby abstracting the complexity of the Bitcoin staking scenario, allowing users and developers to adopt it quickly.

Basic Project Information

Basic Information

Website:

Twitter:

TG:

DC:

Github:

White Paper:

Launch time: June 2021 mainnet launch, Solv Protocol has not issued tokens.

Project Team

Core Team

Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University, previously co-founded Beijing Youzan Technology, dedicated to applying blockchain technology to the automotive industry database. In addition, he also worked as a financial analyst at Singularity Financial, researching blockchain technology integration and financial regulation.

Will Wang : Co-founder. He created "ERC-3525: Semi-Homogenized Token Standard" and has 20 years of experience in the financial IT field. He has led the design and development of the world's largest bank accounting system based on open platform and distributed technology, and is a recipient of the "Zhongguancun 20th Anniversary Outstanding Contribution Award."

Meng Yan: Co-founder. Formerly served as Vice President of CSDN, and he is also an active KOL in the Crypto industry.

Financing Situation

Solv Protocol has raised approximately $29 million through three rounds of financing.

angel round

• On November 10, 2020, it was announced that they completed a $6 million angel round of financing, led jointly by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Venture Capital, BincVentures, and Emirates Consortium.

Seed Round

• On May 8, 2021, it was announced that a $2 million seed round of financing had been completed, invested by a certain trading platform.

• On August 30, 2021, it was announced that a $4 million seed round financing was completed, led jointly by Blockchain Capital, Sfermion, and Gumi Cryptos Capital, with participation from DeFi Alliance, Axia 8 Ventures, TheLao, CMSholdings, Apollo Capital, Shima Capital, SNZ Holding, Spartan Group, and others;

• On August 1, 2023, announced the completion of a $6 million seed round financing, with investments from institutions such as Laser Digital, the investment arm of Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Jingwei China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

• On October 14, 2024, announced the completion of $11 million in strategic financing, with participation from companies such as Laser Digital, Blockchain Capital, and OKX Ventures.

During the three rounds of financing, Solv Protocol raised a total of 29 million USD, and well-known investment institutions such as Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures made significant investments in it, indicating a strong confidence in the future development of Solv Protocol in the capital sector.

Development Strength

The Solv Protocol was established in 2020. Key events in the project's development are shown in the table:

From the perspective of key events in the development of the Solv Protocol project, Solv Protocol has been consistently working to lower the threshold for creating and using on-chain financial tools. This has enabled Solv Protocol to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi track and rapidly capture the LST market based on BTC. In terms of the timeline for achieving various key technical milestones, Solv Protocol has completed the technical development of the project as scheduled, which demonstrates the strong capabilities of the Solv Protocol technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market cap of over 1.3 trillion dollars. However, for a long time, BTC holders have simply held onto their BTC without unlocking its potential value like ETH. Therefore, Solv Protocol advocates for unlocking the $1.3 trillion potential of BTC assets through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi and launched the full-chain yield BTC asset SolvBTC, which can release the staking liquidity of BTC. Recently, it also introduced the concept of Staking Abstraction layer(SAL), marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated stake platform

In the Solv Protocol architecture, the staking process is divided into four key roles, which are closely linked together through an integrated platform architecture:

• LST Issuers (LST Issuers): Create liquidity yield tokens (LST) linked to staked Bitcoin. Solv is currently the largest Bitcoin LST Issuer in the market. It allows users to maintain asset liquidity while staking Token (LST) and Bitcoin, participating in DeFi and other yield activities.

• Staking Protocols (Staking Protocols): Manage users' deposited BTC, providing secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc. provide sources of BTC staking returns, allowing users to earn rewards from POS chains by staking BTC in POS networks.

• Staking Validators (Staking Validators): For example, Ceffu, Cobo, Fireblocks, Solv Guard, etc. are responsible for verifying transactions, ensuring the legality and security of staking transactions, verifying that the staked Bitcoin corresponds to LST Token, and timely updating the verification status.

• Yield Distributors (Yield Distributors): Ensure that staking rewards are transparently and fairly distributed to LST holders, guaranteeing that users can timely receive staking returns. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

Solv Protocol integrates these four key roles to build a complete Bitcoin staking ecosystem. By integrating staking protocols, LST issuers, validators, and yield distributors, it achieves seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying staking implementation for users and developers. The staking protocol provides the source of income for staking Bitcoin, LST issuers issue liquid staking tokens, allowing users to maintain asset liquidity during the staking period, validators are responsible for verifying the legality and security of staking transactions, and yield distributors are responsible for transparently distributing the yields generated from staking to LST holders. This provides users with a more convenient, safer, and more attractive staking experience.

Staking Abstraction layer(SAL)Staking Abstraction Layer

Staking Abstraction Layer (SAL) is a modular architecture designed to facilitate secure and efficient BTC bookkeeping through key components interacting with the Staking Parameter Matrix (SPM). The key modules of SAL include the LST generation module, transaction generation module, validation nodes, and profit distribution module, all of which rely on SPM to define transaction rules, validation standards, and profit calculations. These components together form a framework that ensures the security, transparency, and efficiency of BTC bookkeeping and LST issuance, enabling users to maximize profits while minimizing the risks associated with the bookkeeping process and cross-chain interactions.

Staking Parameter Matrix ( SPM ): The SPM module serves to standardize various settings and parameters for BTC staking. SPM provides developers with a simple and standardized set of rules, allowing them to more easily integrate BTC staking scenarios into their applications without having to design complex systems from scratch.

LST Generation Module: The purpose of the LST generation module is to simplify the issuance of cross-chain liquidity staking Token ( LST ). The issuance process of cross-chain staking Tokens has been standardized and automated, allowing users to avoid manually participating in complex cross-chain operations. This module enables LST issuers to quickly and conveniently issue liquidity staking Tokens and distribute these Tokens to users.

Transaction Generation Module: The function of the transaction generation module is to automatically generate and broadcast BTC staking transactions. Simply put, the job of this module is to automatically create and send staking transactions to the BTC mainnet. Previously, users had to manually perform many steps, but now this module will automatically complete most of the work for users, making the staking process much simpler.

Validator Nodes: Real-time verification of the legitimacy and security of staking transactions. The role of validator nodes is to ensure that all staking transactions are legitimate and secure. When users stake, these nodes check and verify the correctness of the transactions, ensuring that there are no issues before confirming the transactions.

Revenue Distribution Module: Responsible for correctly mapping staking rewards to LST holders. When users earn rewards through staking, the revenue distribution module is responsible for correctly distributing these rewards to the users' LST Tokens. Users can earn corresponding staking rewards based on the proportion of LST Tokens they hold.

In summary, SAL, as a staking abstraction layer, is characterized by integrating multiple staking participants (, including Bitcoin staking providers, yield generation, and DeFi scenario unlocking ), abstracting and encapsulating these complex processes into standardized modules. This enables developers to quickly integrate Bitcoin staking functionality into their own applications and allows users to initiate staking in a comprehensive manner. SAL is simplifying the implementation of staking to facilitate greater adoption of dApps. For example, DeFi applications or wallet applications only need to integrate SAL to provide a range of staking options for their user base. However, since Bitcoin itself does not support staking, all third-party staking may introduce certain security risks, and SAL is no exception. As SAL integrates staking-related solutions, the technical complexity and compatibility behind the integration may also bring new security risks. Therefore, SAL needs to continually address challenges related to operational robustness and security.

Advantages Compared to Other BTCFi Projects

As an LST project in the BTCFi sector, Solv Protocol faces many projects in the market that are highly similar to it, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone. Each of these has a high degree of similarity with Solv Protocol. After the launch of SAL, Solv Protocol began to focus on integrating BTC liquidity, which gives it a significant advantage over other projects.

Security Guarantee

Solv Protocol ensures the security of staking transactions by integrating the active verification service (AVS). The AVS system comprehensively monitors all aspects of staking transactions, including target addresses, script hashes, staking durations, etc., to ensure the validity and security of the transactions, thereby avoiding errors or malicious activities. This comprehensive monitoring and verification mechanism provides reliable protection for users' staking transactions.

Process Optimization

Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform without having to perform other on-chain operations, which ensures both user safety and improves staking efficiency, allowing them to earn returns.

All-Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts a CeDeFi model, combining CeFi and DeFi to provide transparent contract management services. Through the multi-signature contract address of Gnosis Safe and Solv Vault Guardian, it achieves refined permissions and conditional execution, ensuring asset security and efficient system operation.

Industry Standardization

After launching SAL, Solv Protocol also aims to integrate BTC.